Global Cloud IMS Market Research

Global Cloud EPC & Microservice

Market Research

© 2018 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.

No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Highly Confidential

May, 2021

shenzhen China

2

Agenda

2 Global Cloud EPC & Microservice Market Overview

1 Introduction

3 Global Cloud NFV & EPC Market Size, Forecast and Competitive Landscape

4 Global Microservice Market Size, Forecast and Competitive Landscape

5 Conclusion

6 Appendix

3

Methodology (1/3)

► Frost & Sullivan adopts multi-sources methodologies to build up industry data. Initiated from

secondary research as an start point, we conducted interviews with industry participants across

the industry chain, leading us to reach a market consensus.

Key data and information

Deliverables

Source

► Frost & Sullivan in-house research

► Industry reports

► Market database

► Trade journals

► Industry literature

► Annual reports

► Information

► Industry development environment

► Industry development trend

Secondary Research

Source

► Information from authorized

organizations

Information

► Market size

► Market share of key manufactures

Information Sourced

Source

► In-depth, telephone and

face-to-face interviews

► Experienced Industry expert

would be chosen in primary

research

Information

► Sales revenue, 2012 - 2017

► Industry structure

► Drivers and restraints

Primary Research

Assumption for Growth and ForecastIn compiling and preparing the Frost &

Sullivan Report, Frost & Sullivan assumed

that (i) the social, economic and political

environment is likely to remain stable and

(ii) key industry drivers are likely to

continue to affect the market over the

forecast period from 2018 to 2022. For the

projection of total market size, Frost &

Sullivan plotted available historical data

against macroeconomic data as well as

data with respect to related industry

drivers,

4

Methodology (2/3)

ProfitabilityBrand

Distributed

Replacement

of ModalitiesDistribution

Network

Primary Research on Distribution Side

Distribution Structure Revenue

Dynamics

Interviews with Distributors

Distribution

Penetration

Market

EnvironmentMarket

Size

New

Projects

Channel

Trend

Primary Research on Manufacturing Side

Drivers

Restraints

Competitors

Product Price

Trend

Interview with Manufacturers

Market

Share

Perception

on Future

Market

Market

Strategy Inputs

Source:

•Frost & Sullivan

Data Bases

Annual/Cumulative

Unit Sales

Annual Revenue &

Forecast

Growth Rates

Inte

rvie

w w

ith

In

du

str

ial E

xp

ert

Base Year Estimation

Unit Shipment

Average Price

Revenues

Forecast, 2018-2022

Unit

Forecast

Price Forecasts

Revenue Forecast

Market

Model

(60% weight age)

(30% weight age)

(10% weight age)

Population Growth

Qu

ali

ty C

on

tro

l

Disposable Income

Consumptive Trends

Regulation Effect

Overall Market

Prosperity

Relevance

Factor

5

Methodology (3/3)

7.Quality Control within Research Department

Forecasts are integrated into the market section and verified by other team members in the industry research group (IRG) and director.

6.Delphi Technique Integration, If Needed

If data and forecast scenarios conflict, it becomes necessary to again discuss the market forecasts with the industry experts

5.Forecasts Calculated

At this stage, analysts collect and assess the market data needed to create the most probable forecast scenarios.

4.Expert-Opinion Integration with Analyst Team

The interview process integrates industry experts’ insights with the data and analysis

3.Identification of Market Drivers and Restraints

At this stage, the analyst specifies the drivers of revenues and determines the elements that will inhibit growth

2.Measurements and Challenges Analyzed over Time

Measurements and challenges are analyzed over time to provide additional insights into impact on the market size and development.

1.Market Engineering Research Process Completed

Provides the navigational measurements of current market position and trends, which become the basis of the forecast

► Methodology integrates several forecasting techniques with the Market Engineering measurement-

based system. It relies on the expertise of the analyst team in integrating the critical market

elements investigated during the research phase of the project. These elements include:

6

Limitations

► Source of Information

Industry Expert

Interview

Market indicators for

modeling

Official Statistical sources

• Interviews with manufacturers and

competitors are conducted to collect

information for this report, based on a

best-efforts basis.

• Frost & Sullivan will not be responsible

for any information gaps where

Interviewees have refused to divulge

confidential data or figures.

• The base year of this study is 2017, the forecast

period would be from 2018 to 2020. However, in

the beginning of 2018, most of the macro figures of

2017 are not available from public statistical

sources. Frost & Sullivan will use the latest

information available (e.g. 2016) or make

estimations based on past years’ trend

• In instances where information is not

available, figures based on similar

indicators combined with Frost & Sullivan

in-house analysis will be deployed to

arrive at an estimate.

• Frost & Sullivan will state

the information sources at

the bottom left hand corner

of each slide for easy

reference.

7

Project Scope

Review

Period

► Historical Year: 2016 to 2019

► Base Year: 2020

► Forecast Year: 2021E*-2025E

Geographic

Scope ► Global

Target Market ► Cloud EPC Market

► Microservice Market

Scope

► The Project Scope is Defined as Followings

*Note: E refers to Expected

8

Definition and Abbreviation

Definition

• NFV: Network Functions Virtualization is committed to decoupling software from hardware for traditional telecom equipment. It

aims to use general-purpose computing, storage, and network devices to provide pool and share infrastructure with telecom

network functions to improve management and maintenance efficiency, and enhance system flexibility. NFV is key enabler

technology for cloud transformation which will reconstruct the telecommunication operator's network, service, and even

operation.

• EPC: Evolved Packet Core(EPC) is a framework standardized in Release 8 of the 3GPP for giving data and converged voice

on a network based on 4G Long Term Evolution(LTE). Evolved Packet Core is based on a constant network connection or an

always-on connection. Evolved Packet Core helps in combining voice and data on an Internet Protocol(IP) service architecture.

This helps service operators in operations as well as deploying one packet network for 2G, 3G, LTE, WLAN or fixed access

such as cable or DSL.

• Cloud EPC: Technological and business trends are driving a deployment model of the EPC where the EPC functions are

deployed as services on a virtualized platform in a cloud computing infrastructure. These trends, known as network function

virtualization(NFV), can be combined with software-defined networking(SDN) to implement the EPC in an all software

deployment in a cloud.

► NFV: Network Functions Virtualization

► LTE: Long Term Evolution

► MME: Mobility Management Entity

► PDN GW: Packet Data Network Gateway

► SGW: Serving Gateway

► DevOps: Development Operations

► DNS: Domain Name Server

► Cloud EPC: Cloud Evolved Packet Core

► Cloud OS: Cloud Operating System

► SGSN: Serving GPRS Support Node

► GGSN: Gateway GPRS Support Node

► TGW: Trusted Gateway

► CG: Charging Gateway

► NEs: Network Elements

Abbreviation

9

Definition and Abbreviation

Definition

• Microservice Structure: Microservice Structure is a variant of service-oriented architecture(SOA).Contrary to Monolithic

Structure, Microservice decouples numbers of small service modules from the whole application and store them in cloud. In

addition to strong cloud-based computing power, Microservice structure is highly flexible compared to Monolithic Structure,

allowing faster package expansion and easier module adjustment.

• PCRF: Policy and Charging Rules Function(PCRF) is a software designated for real-time service policy rules determination of

a multimedia network. PCRF aggregates information in and out of the network in real time, automatically setting rules and

policy for each user over the network. Such network might provide multiple services such as quality of services, charging rules

etc. PCRF can be integrated with different platforms like billing, rating, charging, and subscriber database or also be deployed

as a standalone entity.

• HSS: Home Subscriber Server(HSS) is a server in charge of storing and updating all user subscription information, such as IP

address, user identification like IMSI (International Mobile Subscriber Identity) and MSISDN (Mobile Subscriber ISDN Number)

or mobile telephone number.

► SOA: Service-Oriented Architecture

► MNA： Monolithic Structure Architecture

► QoS: Quality of Services

► IMSI: International Mobile Subscriber Identity

► HLR: Home Location Register

► E-UTRAN: Evolved UMTS Terrestrial Access Network

► CRF: Charging Rules Function

► MSA: Microservice Structure

► PCRF: Policy and charging rules Function

► HSS: Home Subscriber Server

► MSISDN: Mobile Subscriber ISDN Number

► AuC: Authentication Center

► PDF: Policy Decision Function

► UMTS: Universal Mobile Telecommunications Service

Abbreviation

10

Agenda


1 Introduction

3 Global NFV & Cloud EPC Market Size, Forecast and Competitive Landscape


5 Conclusion

6 Appendix

11

•The core network is telecom networks' switch and control center. After the shift to cloud, the core network must continue to offer operator-class services, such as high reliability, high performance, and fault recovery, in addition to open architecture. To meet these requirements, the core network must adopt a cloud-based software design. Therefore, as one of the core network virtualization products, cloud EPC is based on the

advanced cloud-based software architecture design and will lead the core network’s cloud transformation.

Cloud Transformation

•A large number of sites build data centers to integrate hardware resources. However, by sharing virtualized hardware resources, cloud EPC optimizes hardware resource utilization and reduces types of hardware in use, therefore enabling carriers to respond to market promptly and to reduce device purchase and maintenance costs.

Efficient Use of Resource

•Third-party apps can be integrated to the cloud EPC so that carriers can provide innovative services and due to the standard interfaces, various virtualization software is supported. Various hardware devices are supported and the hardware devices and virtualized cloud platform constitute the telecom cloud infrastructure layer to provide virtual resources and services for the service layer, which largely increases openness and flexibility.

Flexibility and Openness

Source: Frost & Sullivan

Global Cloud EPC Market Overview

The Significance of Cloud EPC Product or Solution

12


Market Drivers, Challenges and Development Trend


Growing Network Infrastructure

The digitization of various industries

have arouse demand for stable,

convenient and fast-transmission

network and cloud service.

Quarantine during Covid-19 lead to

further penetration of online business,

online education and so on, which

promote the expansion of cloud EPC.

CapEx and OpEx Minimization

Increasing numbers of enterprises of

different industries are making great

efforts to realize the minimization of

CapEx(capital expenditure) and

OpEx(operating expense). This

infrastructure management trend will

boost the application of virtualization.,

which may further facilitate the

development of cloud.

Development TrendDrivers Challenges

SLA Guarantee

Ensuring the service quality, high

performance and high reliability after

moving up the service to cloud is

challenging for most operators.

Hardware and Software

Compatibility

Going to cloud will lead to layered

system, software-hardware

separation and other problems which

must increase operation difficulties

as most hardware and software are

from different suppliers. Besides,

due to the inconsistency of update

frequency, the disparity of hardware

and software life cycle may result in

various compatibility problems.

Larger Bandwidth and Reliability

Mobile devices have became the

major entertainment and working

terminal nowadays. During the

Covid-19 quarantine, people has

consumed more video content and

interact more frequently online via

multi-media, which promoted

demand for larger bandwidth and

reliability. In the future, 5GC will

provide better user experience while

further support industrial requirement

on bandwidth and reliability.

Openness and Cloudification

Telecom operators need to fulfil

customers’ sophisticated demands

with more flexible and open

architecture. Cloud EPC could

enable dynamic resource allocation

and offer more virtualization

capabilities.

13


Significant Features of Cloud EPC Product

Carrier-grade

Reliability &

Performance

The cloud-based network must provide the same level of service quality, reliability and

security as a traditional network.

With COTS hardware, Cloud OS and SDN technology, services and network resources

can be orchestrated automatically. Traditional O&M need a long time ahead to plan

service development. Cloud-based network has the ability to schedule resources in the

data center and escalate its service. In this way, the lifecycle of network services can be

done automatically, including planning, onboarding, scaling, healing and termination.

Automated lifecycle management is important for operators to reduce their TCO.

By introducing DevOps into CT service operation, operators can deliver new services to

their users much faster, and react to user requirements much faster. The TTM of

traditional network service is too long. Operators want to have the agility of internet

companies.

Smooth evolution towards 5G is a key requirement for cloud-based network. The network

architecture must be agile and elastic, so that it is easy to make changes to the structure

and functions of the network. Network slicing should be easily realized on the network.

Automated O&M

Ability of

Smooth

Evolution to 5G

Capability of

Agile

Application

DevOps


14

Global Microservice Market Overview

Development from Monolith to Microservice

1

All functions are

wrapped as a single

package and be

deployed on the server.

The architecture is

simple to develop, test,

deploy, operate and

maintain so it’s usually

for project of small

scale.

•Traditionally, software are developed as the monolith architecture like ORM (Object Relational Mapping), which is for simple services at early time, with all the functions coupled and integrated together. The initial cost is low but the difficulty of secondary development and deployment is high, and it’s not flexible enough to deal with the rapidly increasing user scale and data traffic.

•As Internet population booming all over the world and services getting more and more complicated, monolith architecture is under great pressure to deal with the high data traffic environment. Software architecture has to evolve to fulfill the emerging demands, and till now there’re major stages including MVC (Model- View-Controller), RPC (Remote Procedure Call), SOA (Service Oriented Architecture) and Microservice, each representing a evolutionary direction for specific demands.

From Monolith to Microservice


Marginal benefit of

increasing only the

number of machines

decreases as data

traffic is growing so

fast. Developers must

split the original

systems into different

services, which can

run independently, in

order to improve

overall efficiency.

When services are

separated, interactions

and communications

between each module

became more frequent.

Common modules are

extracted and run

independently. It can

be easily called so the

internal consumption

can be reduced.

A control center is

needed to manage the

real-time cluster

capacity based on

data traffic so as to

increase cluster

efficiency. SOA is the

scheduling and

governance center to

improve machine utility

and reduce waste of

resources.

Based on the SOA

concept, services are

splited further to take

single responsibility.

They can be easily

reused when new

demand comes up,

therefore improving

the development

efficiency. However,

maintenance cost also

increase in the more

complicated system.

RPC

(Remote Procedure

Call Protocol)

ORM

(Object Relational

Mapping)

SOA

(Service Oriented

Architecture)

MVC

(Model-View-

Controller)

Microservice

Architecture

15


Significant Features of Microservice Architecture

Independent

Development

&Deployment

Each service is decoupled from the others and can be developed and deployed independently. Iteration

of one service won’t lead to test and re-deployment of the whole system, which is common in monolith

architecture, and could result in high cost for complex system.

The microservice is design at process-level, and runs independently as it’s isolated by process. The

fault scope can be effectively controlled compared to monolith, one single fault won’t affect the whole

system so it’s more reliable than monolith system.

While monolith architecture can only be scaled as a whole system, microservice allows Operators to

scale up on a more precise granularity based on the real requirement on specific resources.

Granularity of microservice architecture is more precise and the impact on the whole system is smaller.

It won’t require large-scale restructuring but minor modifications of individual module. Note that

there’s a tradeoff between granularity and system performance, since smaller granularity would incur

difficulties in maintenance and integration, which may weaken the performance.

Fault Isolation

Architecture

Evolution

Scalability


Each microservice can be independently developed, tested and deployed in parallel, which improve

delivery efficiency greatly and enable faster product iteration.Fast Delivery

16


Operators’ Demand on Microservice


► Redundancy Reduction

Systems in Operators have been developed for decades

with different purposes at different levels. They’re

isolated and not will-managed and too complexed

provide prompt responses. Microservice is a solution to

the redundance and low efficiency due the existing

isolated systems.

► New Standard in Communication Technology

Originated from Information Technology, microservice

has matured in Communication Technology that many of

the major authorities such as 3GPP, ETSI have applied

microservice as the standard in NFV during could

transformation. 5G technology is a typical example.

Business Demand

► Intensive Management

Three major domestic operators in China are establishing

centralized IT systems to meet the access needs of

different businesses and different provinces. Microservice

is a solution due to the feature of independent

deployment and rapid iteration.

► Diversified Business Model

Traditional operators has transformed as a provider of

diversified services. Business complexity results in

system complexity, which cannot be fulfilled by monolith

system. Microservice architecture is more flexible and

reliable to meet the need of diversified business model.

► Matured Technical Condition

Microservice architecture has matured with the support of technology ecological environment (containerization, DevOps tool chain, development language framework, design and development methodology, etc.). Many Internet companies and organizations have verified the unique advantages of microservice architecture in practice.

► Autonomous and Controllable

Existing monolith systems are mainly provided by

external suppliers, with solid technology stack that

autonomous R&D team cannot easily enter. Microservice

with interface layer interaction and the contract-driven

model is more beneficial for improving autonomous and

controllable.

System Demand

Technology Maturity

17

Agenda


1 Introduction



5 Conclusion

6 Appendix

18

► The global NFV market has kept increasing from 2016 to 2020, at a Compound Annual Growth Rate (CAGR) of 35.7%. It is predicted that the

global NFV market will maintain a rapid growth in coming years mainly owing to abundant demands from operators. Simultaneously, NFV is

widely applied in datacenter networking, access network as well as 5G network architecture transformation, which are regarded as

remarkable drivers to the development of NFV market.

► NFV enables a variety of network functions including Evolved Packet Core (EPC),Broadband Remote Access Server (BRAS), Customer

Premise Equipment (CPE), IP Multimedia System (IMS) and Service Router(SR) to be implemented cost effectively in software. Benefited

from cost saving and centralized management, more and more operators are tending to utilize NFV.

► With the matured cloud infrastructure and the establishment of the ETSI Industry Specification Group for Network Functions Virtualization

(ETST ISG NFV), North America, Western Europe, East Asia and the Middle East are already advanced in NFV implementation. Coming

demands for NFV is expected to grow rapidly in developing countries in Asia-Pacific Region, Latin America and Africa, etc.

Market Size and Forecast

Global NFV Market Size and Forecast


2016-2020 2020-2025E

CAGR 35.7% 25.5%USD Billion

Global NFV Market Size, 2016-2025E

4.3 6.2

8.6 11.6

14.6

19.0

25.4

31.7

38.5

45.4

-

10.0

20.0

30.0

40.0

50.0

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

40.8%

21.0%

24.9%

13.3%

EMEA

North America

Asia Pacific

Latin America

Market Share by Region, 2020

19

► The global cloud EPC market registered a rapid increase from 2016 to 2020, with a CAGR of 20.0%. The market has reached the top in 2019,

then turned around due to the implementation of 5G NGC. It’s estimated that the cloud EPC market will be declining at the CAGR of -7.8%

from 2020 to 2025.

► Currently cloud EPC is applied to support the implementation of 5G with VoLTE and data service at the NSA stage. However, as the 5G

deploys further to SA stage, the current EPC network will be transformed to NGC, thus turning the market around.

► The past few years have witnessed rapid growth of the cloud EPC market in EMEA and Asia pacific, accounting for around 70% of global

market share in 2020. It’s expected that demands is decreasing globally as 5GC construction will be the operators’ priority in the coming

years.


Global Cloud EPC Market Size and Forecast


Global Cloud EPC Market Size, 2016-2025E*

756

1,079

1,390

1,603 1,568 1,533 1,447

1,327 1,194

1,047

0

200

400

600

800

1000

1200

1400

1600

1800

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

USD Million

2016-2020 2020-2025E

CAGR 20.0% -7.8%


37.8%

27.4%

29.5%

5.3%

EMEA

North America

Asia Pacific

Latin America

20

Global Market Competitive Landscape

Competitive Landscape - Shipment and Cut-over

► At the NSA stage of 5G, cloud-based evolved packet core is applied for the compatibility of 4G and 5G, as well as enabling

functions such as CUPS, slicing, etc. before 5G NGC is ready, improving the efficacy and efficiency of the Operators. Among

all the solution suppliers, Huawei as the initiator, is leading the market in 2020, by the number of solutions shipped to

customers. From the perspective of large-scale commercially applied cut-over, Huawei still dominates the market of nearly

40.3% for the market share.

► As Operators gradually evolve to 5G network, the competition between service providers will shift to 5G core net work as well.

As an early mover, Huawei establishes industry standard and is able to fulfil customers’ demand with advanced technology

and reliable solutions, which has been proven with certain business practice featured with strong disaster backup and

recovery ability, fully going-to-cloud architecture, SVC (Single Voice Core) solution, core-edge coordination, data security, etc.


39.1%

26.3%

12.5%

7.2%

12.3% 2.5%Huawei

Ericsson

Nokia

Cisco

ZTE

Others

Global Cloud EPC Commercial Cut-over Amount,

2020

40.3%

25.6%

12.3%

7.0%

12.0%

2.9%

Huawei

Ericsson

Nokia

Cisco

ZTE

Others

Global Cloud EPC Shipment, Market Share,

2020

21


Competitive Landscape - Online SAU and Internet Flow

► Increasing user amount, connected devices and data traffic as well as transition to 5G are the key factors that driving the cloud

EPC market in the past. Global monthly mobile data traffic has exceeded 29 exabytes by the end of 2019, 140% higher than

that in 2017. Besides, global mobile devices and connections have reached 10 billions in 2019. All of these are calling for a

massive amount and stability of Virtualized Evolved Packet Core devices as well as infrastructure. Cloud EPC provides

openness and more importantly, the great ability to maintain stability while the internet flow or users are reaching the peak.

► With leading devices amount and advanced use case with Operators, Huawei gains its competitive advantages outweigh other

market players so far.


39.5%

26.6%

14.6%

6.9%

11.1%

1.4%

Huawei

Ericsson

Nokia

Cisco

ZTE

Others

Shares of Global Data Traffic on Cloud EPC

(Tbps), 2020

39.3%

27.5%

14.4%

7.0%

10.3%1.6%

Huawei

Ericsson

Nokia

Cisco

ZTE

Others

Shares of Global User Amount of Cloud EPC (SAU),

2020

22

Global Cloud EPC Market Competitive Landscape

Competitive Landscape – Key Feature Performance

► Cloud EPC can be evaluated according to the four layers in the software stack: infrastructure layer, software

architecture layer, network architecture layer, and capability exposure layer. The key features of each layer are listed

as following:

(1) Business Enabling Layer: Agility of introducing new services into network / flexibility of consolidating Gi-LAN service

into EPC

(2) Network Architecture Layer: CUPS (Control Plane & User Plane Separation) / MEC

(3) Software Architecture Layer (Cloud Native): Stateless design / service decomposition & on-demand composition /

support for light virtualization (containers) / System Automation (Continuous Integration & Continuous Deployment, CI &

CD)

(4) Infrastructure Layer: Open to COTS hardware and various Cloud OS / Cloud OS Optimization / Multi-architecture

Hardware Platform

Not every vendor is able to conduct carrier grade optimization on the infrastructure layer. Huawei CloudEPC provides

comprehensive technology to optimize its own COTS hardware (FusionServer) and Cloud OS (FusionSphere). The

optimization includes FPGA acceleration cards, CPU binding, huge page, pass through, and interrupt aggregation, etc.

Meanwhile, Ericsson has Cloud Execution Environment, Cisco has Unified Computing System (UCS) hardware and its

own NFVI software., Nokia has CloudBand Infrastructure Software, ZTE has Cloud Infrastructure Solution, but the major

trend is developing 5GC architreture.

For software architecture layer, mainstream service providers have built consensus on cloud native, including stateless

design (service and data decoupling), service decomposition & on-demand composition, support for light virtualization

(containers) and system automation (continuous integration & continuous delivery, CI & CD). Huawei started on cloud

native architecture from the very beginning. Huawei first released highly reliable virtualized EPC with stateless design,

implemented service based architecture through service decomposition and obtained CI/CD as well as gray scale

upgrade capability ready for DevOps, going ahead of their competitors.

23



On network architecture, CUPS and MEC are key technologies towards 5G evolution. After years of development and

market practice, both CUPS and MEC have became more matured. CUPS enables the operators to increase data

transmission efficiency and improve user experience, while MEC will perform better in 5G SA architecture to support

network function and the coming IoT era as well. Huawei has participated in a number of 5G projects in the recent years,

which keeps them in the leading position.

On service enabling layer, Huawei Cloud EPC introduces machine learning technology for service awareness in order to

identify encrypted traffic types for data monetization. Huawei also uses machine learning in IoT behavior detection and

KPI detection for China Mobile. Ericsson, Cisco Nokia and ZTE also use AI technology in their cloud EPC solutions, but

mostly for network automation and user experience optimization.


Infrastructure Layer Software Arch Layer Network Arch Layer Service Enabling Layer

Huawei

Ericsson

Cisco

Nokia

ZTE

Comprehensive Evaluation of Major Vendors on the Four Layers of Cloud EPC

24



► There are 5 top concerns of commercial deployment for cloud EPC (by a survey conducted on service providers),

which are:

(1) O&M: automation for network design & deployment, enabling CI & CD , A/B test for rapid iteration of new services,

cross layer troubleshooting & self healing for daily maintenance

(2) Performance: optimization of COTS hardware and infrastructure software to obtain carrier grade performance

(3) Reliability: redundancy mechanisms, ability of recovery, self-healing, dealing with high concurrency, fast load

balancing, etc. on various levels such as network, VNF, hardware, infrastructure layer, CloudOS, VM, network element,

network across DC and so on.

(4) Network Architecture: flexible architecture enabling IP-based scaling, automated network management, etc.

(5) Security: systematic solution against external and internal attacks


O&M

Performance

SecurityReliability

Network Architecture

Key Character Performance of Different Cloud EPC Brand

Huawei Ericsson

Cisco Nokia

ZTE

25



Market-oriented Competitive Landscape

High

Low

Low High

0% 200%

100%

Maturity

Growth Rate

Hints:

1.The values for the coordinates x refers to Growth Rate, ranging from 0% - 200%

2.The values for the coordinates y refers to Product Maturity, ranging from 0% - 100%

3.size of the bubbles refers to Market Share

Huawei Ericsson Nokia

Cisco ZTE

Global Cloud EPC Competitive Landscape, 2020,

by Market Share, Growth Rate and Product MaturityMarket Share: The market share of each competitor is

calculated by signed cloud EPC deployment contracts

during 2020, from which the size of the bubbles that

showing on the graph is dimensioned.

Growth Rate: The growth rate of each competitor is the

CAGR of increasing cloud EPC deployment contracts

amount during the past three years. This value is

reflecting on the position on coordinate axis X, ranging

from 0% - 200% since the industry is growing rapidly.

Maturity: The maturity is defined as to what extent the

cloud EPC product provided by each competitor can fulfill

the customers’ demand and keep the pace on market

trend.

Overview: From the graph it indicates that Huawei is

leading in market size, growth as well as product

technology maturity. Though Ericsson, Nokia, Cisco had

grabbed market share from Huawei especially in North

America and Europe market., Huawei is incontrovertibly

more advanced in technology and application with the

Operators, which boost its market performance with

proven success cases.

26

Agenda


1 Introduction



5 Conclusion

6 Appendix

27

► The operators microservices market extrapolated to grow from 21.7 billion in 2020 to 60.4 billion by 2025 at CAGR of 22.7%.

It’s trending that operators are switching to microservice architecture from monolith to achieve agility, automation and

intelligence of communication network operation and maintenance.

► Operators employing microservice architecture could better manage the more diversified business model and challenging

customer demand, especially in the 5G era. Switching to microservice provides the ability of independent development, flexible

deployment and fast delivery as well, but it requires not only technology readiness or hardware update , but also organization

transformation to match the new operation model and make the best use of microservice architecture.

► Microservice architecture is more matured in Europe and North America, which contribute to more than 50% of the global

market.


Global Microservice Market Size and Forecast


Global Microservice Market Size, 2016-2025E*

7.6 10.7

14.3 18.4

21.7

27.6

34.8

41.9

51.3

60.4

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

USD Billion

2016-2020 2020-2025E

CAGR 30.0% 22.7%

32.2%

37.4%

25.0%

5.4%

EMEA

North America

Asia Pacific

Latin America


28

27.4%

26.2%13.6%

18.0%

13.0%

1.8%

Huawei

Ericsson

Nokia

Cisco

ZTE

Others


Competitive Landscape – Data Traffic and Revenue

► Because of the benefit of microservice architecture, it’s a trend that the operators are switching from monolith to this flexible

architecture in order to support the digital busines model of 5G. Microservices providers can help operators to achieve the

transformation from infrastructure level to system level .

► Among the providers, the leaders include Huawei, Ericsson, Nokia, Cisco and ZTE. Huawei is leading in the market with a

market share of 27.2% in terms of data traffic and 27.4% from the perspective of revenue, Ericsson and Cisco are closely

behind. Being advanced in technology, application and business cases, Huawei is widely recognized and has provided proven

business solutions in upscale market.


27.2%

25.3%12.1%

19.0%

13.4%

3.0%

Huawei

Ericsson

Nokia

Cisco

ZTE

Others

Global Microservice Revenue, Market Share,

2020

Global Microservice Data Traffic, Market Share,

2020

29

Global Cloud Microservice Market Competitive Landscape


Within the microservice architecture, an application is developed as a suite of small services. Each of the servicers runs

in its own process and communicates with lightweight mechanisms, usually an HTTP resource API.

The single responsibility principle requires that classes should be highly coupled internally and a change to a specific

area of the class should affect all dependent classes. The illustration is simple but hard to follow in real practice because

of the dynamic business demand, service granularity and reusability, as well as the interlinkage between microservices.

Microservices are loose coupling with each other, thus can be deployed and iterated independently without influencing

other processes, which lower the maintenance cost. Running in its own process, microservice can be complied in

different languages with flexibility to take advantage the best option.


Lightweight Class Principle of Single Responsibility Independent Deployment

Huawei

Ericsson

Nokia

Cisco

ZTE

Comprehensive Evaluation of Major Vendors on the three principles of Microservice

30



► There are 5 top concerns of commercial deployment for microservice architecture provider, which are:

(1) Agile Innovation：ability to develop specific solutions for operators diversified demand

(2) Maintenance & Debugging：prompt and reliable maintenance service with low cost incurred, ability of auto

maintenance, grey scale upgrade, partial upgrade, etc.

(3) Launch Efficiency：independently developed, tested and deployed in parallel; fast delivery

(4) Scalability: allows Operators to scale up on a more precise granularity based on the real requirement on specific

resources rather than scale the whole system as a monolithic entity

(5) Performance Improvement: reorganized resources distribution, low redundancy, better customer demand fulfillment


Agile Innovation

Maintenance&Deugging

Launch EffiencyScalability

PerformanceImprovement

Key Character Performance of Different Microservice Brand

Huawei Ericsson

Cisco Nokia

ZTE

31

High

Low

Low High

0% 200%

100%

Maturity

Growth Rate


Global Microservice Market Competitive Landscape

Market-oriented Competitive Landscape

Market Share: The market share of each competitor is

calculated by the data traffic during 2020, from which the

size of the bubbles that showing on the graph is

dimensioned.

Growth Rate: The growth rate of each competitor is the

CAGR of increasing data traffic amount during the past

three years. This value is reflecting on the position on

coordinate axis X, ranging from 0% - 200% since the

industry is growing rapidly.

Maturity: The maturity is defined as to what extent the

microservice product provided by each competitor can

fulfill the customers’ demand and keep the pace on

market trend.

Overview: From the graph it indicates that Huawei and

Ericsson are leaders in the microservice market, followed

by Cisco, Nokia and ZTE. With more user cases and

continuing R&D expense, Huawei is able to quickly

iterate to fulfill customer demand with advanced solutions,

thus improving its share. As the operators accelerate the

transition to microservice architecture, market leaders

must enjoy a relatively fast growth rate due to the

elevation of market demand.Hints:

1.The values for the coordinates x refers to Growth Rate, ranging from 0% - 200%

2.The values for the coordinates y refers to Product Maturity, ranging from 0% - 100%

3.size of the bubbles refers to Market Share

Huawei Ericsson Nokia

Cisco ZTE

Global Microservice Competitive Landscape, 2020,

by Market Share, Growth Rate and Product Maturity

32

Agenda


1 Introduction

3 Global Cloud NFV & EPC Market Size, Forecast and Competitive Landscape


5 Conclusion

6 Appendix

33


Obviously the telecom operators will benefit a lot from the application of cloud EPC, while more outcomes will

be delivered such as the innovation of new business models and industry combination.

► Reducing equipment costs. Through the construction of data center, the combination and dynamic fusion between

infrastructure resource and software resource will contribute to the centralized management. This can largely reduce

the cost of infrastructure deployment while increasing the efficiency based on the existing infrastructure and be fast-

reacting.

► More efficient using of energy. Cloud EPC can achieve the flexible resource offering which not only optimizes

virtual resource but also save a lot of energy.

► Flexible and easy to deploy. Cloud EPC enables operators to transform their business to software layer. Thus

virtual resource can be offered to satisfy telecom operators with customized services while cutting down the

deployment period by more than 80%.

► Opportunities to explore new business models. Given the flexibility by dynamic resource allocation, it is much

easier to innovate and to find new opportunities between own business model and the new one to explore fresh

monetization methods.

Benefits of Cloud EPC Solution

Conclusion(1/4)

34


► The Global NFV Market and cloud EPC markets have both witnessed a rapid increase in the past few years. Due to

the great improvement of NFV and related technologies, over the period from 2016 to 2020, the market size of global

NFV market grew rapidly from USD4.3 billion to USD14.6 billion, representing a CAGR of 35.7%. With the growing

maturity of the market, the growth rate will decrease for the coming few years. The market is estimated to grow to

USD45.4 billion in 2025 from 2020, representing a CAGR of 25.5%.

► Compared to that, Global EPC market has received a CAGR of 20.0% from 2016-2020, and this market will be

declining from USD1568 million in 2020 to USD1047 million in 2025, with an estimated CAGR of -7.8%.


Conclusion(2/4)

Competitive Landscape

► Being as the largest vendor in cloud EPC market, Huawei continues to grow its market performance with advanced

technology and proven user cases. Though the scale of cloud EPC is decreasing due to 5G NGC implementation,

Huawei has already dominated the new market and therefore keep the leading position in the whole WPC market.

► From the perspective of technology application, Huawei has excellent performances in Cloud Structure, degree of

openness to other platforms, automated integration solutions and DevOps capability, which will support Huawei to

deal with challenges happened when operators switch to NGC from EPC.

35


Benefits of Microservice

Conclusion(3/4)

Microservice architecture is attracting more and more attention from operators due to it’s a better structure for

5G core network compared to traditional monolith. It enables operators to achieve independent development &

deployment, fault isolation, Scalability and fast delivery. Though operation efficiency is improved, the

incurred management and integration cost due to smaller granularity as well as complicated relation between

modules must be taken into consideration.

► Easy Iteration with lower cost: Decoupled services can be developed and deployed independently. Service

iteration is independent and lead to test and re-deployment of the whole system, thus lower the cost.

► Fault Isolation: The fault scope can be effectively controlled, one single fault won’t affect the whole system.

► Scalability: Microservice allows Operators to scale up on a more precise granularity based on the real requirement

on specific resources rather than scale the whole system as a monolithic entity.

► Senseless modification: Modifications of individual micro-services has minor impact on the whole system.

► Fast delivery: Each microservice can be independently developed, tested and deployed in parallel, which improve

delivery efficiency greatly and enable faster product iteration.

36


► The Global Microservice Market has witnessed a rapid increase in the past few years. Due to the great development of

cloud service and the trending switch from monolith to microservice architecture, over the period from 2016 to 2020,

the market size of global Microservice market grew rapidly from USD7.6 billion to USD21.7 billion, representing a

CAGR of 30.0%. With the growing maturity of the market, the growth rate will decrease for the coming few years. The

market is estimated to USD60.4 billion in 2025 from 2020, representing a CAGR of 22.7%.


Conclusion(4/4)

Competitive Landscape

► It’s a trend that Operators are switching from monolith to microservices architecture, resulting in a considerably fast

growing market. Designing a new system and making it come true, however, is a tough mission, especially from a

solid and old-fashioned status. It’s a challenge for service providers to miscellaneous stress the issues in the long run.

► Huawei and Ericsson are strong leaders in the microservice market, all competitors are growing fast. It requires not

only continue investment in R&D, but also better understand of operators’ demand to improve market share. It’s

critical to tailor the right and suitable solutions to solve operators’ diversified problems, and the one who is advanced

in it must perform better.

37

Agenda


1 Introduction



5 Conclusion

6 Appendix

38

Appendix

HUAWEI Profile

◼ Huawei

• Huawei is a leading global information and communications

technology (ICT) solutions provider. The company has established a

competitive ICT portfolio of end-to-end solutions in telecom and

enterprise networks, devices and cloud computing. The company is

an active member of the European Telecommunications Standards

Institute's NFV Industry Specification Group (ETSI NFV ISG).

• Private Company

• Regional Coverage: China, EMEA, Asia Pacific, North and Latin

America

Established in

Headquarter

Company Introduction, Listed/Private Company, Regional

Coverage

Product Portfolio

Key Customer

• Huawei is the global

leading provider of

ICT (information and

communications)

infrastructure and

smart terminals with

194,000 employees.

Huawei’s business

has penetrated into

more than 170

countries and

regions, serving

more than 3 billion

people.

1987

Shenzhen, China

Business Performance in 2020


Category USD Billion

Revenue 136.7

YoY 11.2%

Cloud

• Application

& Software

• Storage

• Server

• OSS

Pipe

• Radio Access

• Fixed Access

• Core Network

• Network Energy

• Transport Network

Devices

• Mobile Phone

• Tablets

• M2M Solutions

• Mobile Broadband

• Home Media Service

39

Appendix

NOKIA Profile

◼ Nokia

• Nokia is a Finnish multinational communications and information

technology company which serves communications service providers,

governments, large enterprises and consumers, with the industry’s

excellent, end-to-end portfolio of products, services and licensing.

The acquisition of Alcatel-Lucent leading IP networking, ultra-

broadband access and cloud technology specialist was completed in

Jan. 2016.

• Listed on New York Stock Exchange (NYSE), Nasdaq Helsinki,

Euronext

• Regional Coverage: Europe, Middle East&Africa, Greater China, Asia

Pacific, North America and Latin America

Established in

Headquarter


Coverage

Product Portfolio

Key Customer

• The company’s

customers are

consisted of mobile

network operators,

enterprises,

governments,

transportation

industries and

verticals.1865

Uusimaa,

Finland



• Cloud and data centers

• Communications and

collaboration

• Customer Experience

Management

• Content&video delivery

• Fixed Network

• IP networking

• Mobile broadband

• OSS

• Optical networking

• Routers&switches

• Security

• Wireless

access

• Subscriber

Data

Management


Revenue 26.5

YoY -6.3%

40

Appendix

ERICSSON Profile

◼ Ericsson

• Ericsson is a global company which offers services, software and

infrastructure in information and communication technology (ICT)

industry. Ericsson is a platinum member of OPNFV, with the aim of

speeding up the implementation of network functions virtualization.

• Listed on NASDAQ OMX Stockholm and NASDAQ New York

• Regional Coverage: North America, Latin America, Northern

Europe &Central Asia, Western and Central Europe,

Mediterranean, Middle East , North East Asia, South East Asia

&Oceania, India, Sub-Saharan Africa

Established in

Headquarter


Coverage

Product Portfolio

Key Customer

• Ericsson serves

customers in more

than 180 countries

and derives most of

its sales from large,

multi-year

agreements with a

limited number of

significant customers. 1876

Stockholm,

Sweden



• Application Enablement

• Cloud System

• Communication Core

• Infrastructure and

Components

• IP Network and Transport

• Operations and Business

Support

• Radio System

• TV and Media


Revenue 28.1

YoY 2.3%

41

Appendix

CISCO Profile

◼ CISCO

• Cisco designs and sells a broad range of technologies that have

been powering the Internet since 1984. Across networking,

security, collaboration, and the cloud, our evolving intent-based

technologies are constantly learning and adapting to provide

customers with a highly secure, intelligent platform for their digital

business.

• Listed on NASDAQ Stockholm

• Regional Coverage: Americas; Europe, Middle East, and Africa

(EMEA); and Asia Pacific, Japan, and China (APJC)

Established in

Headquarter


Coverage

Product Portfolio

Key Customer

• The company’ has

field sales offices in

95 countries, and sell

products and services

both directly and

through a variety of

channels with support

from salesforce, and

customers primarily

operate in the

following markets:

enterprise,

commercial, service

provider, and public

sector.

1984

San Francisco,

America



Networking

• Switches ·Routers

• Wireless

• Network Management

• Interfaces & Modules

• Optical Networking

• Security

• IOT

• Collaboration

• Analytics

• Software

• Wireless and Mobility


Revenue 48.0

YoY -6.9%

42

Appendix

ZTE Profile

◼ ZTE

• ZTE is a multinational integrated telecommunications equipment

manufacturer and provider of global telecommunications

solutions. It is dedicated in the development of next-generation

technologies consisting of NFV, SDN, Cloud Computing , the

Internet of Things,etc.

• Listed on Shenzhen Stock Exchange (SZSE) and Hong Kong

Stock Exchange (HKEX)

• Regional Coverage: North America, Latin America, Europe, CIS,

China, Middle East Arica, Asia Pacific

Established in

Headquarter


Coverage

Product Portfolio

Key Customer

• The company has

provided products

and solutions to

telecommunications

service providers,

government and

corporate clients in

more than 160

countries. 1985

Shenzhen, China



Core Network

• Voice

Communication

• Packet Core

• Convergence User

Data

• Intelligent OSS

Wireless

• Base Station

• Controller

• Network

Management

Cloud Computing&IT

• Cloud Computing

• Data Center

Fixed Access

• Optical Access

• Copper Access

• CPE

Device

• Smart Phone

• Home Gateway

• Mobile Hotspot

• Smart Life


Revenue 15.6

YoY 11.8%

43



► Character performance of the leading cloud EPC provider

(1) O&M: could EPC solution of Huawei performs well in agile deployment and easy maintenance, Ericsson and ZTE

have achieved agile deployment but they’re more complex in maintenance.

(2) Performance: both Huawei and Ericsson are featured high concurrency solutions with high efficiency, while Nokia

and ZTE are advanced in efficiency as well.

(3) Reliability: in general all providers perform well in Reliability since EPC has been matured for years.

(4) Networking: Huawei has applied more flexible and open architecture that enables automated network management,

etc.

(5) Security: Huawei and ZTE apply special security mechanism rather than standard security mechanism of other

providers.


Key Character Performance of Different Cloud EPC Brand

Character Huawei Ericsson Nokia Cisco ZTE

O&M 4.8 4.5 3.5 3.5 4

Performance 4.3 4.3 4 3.5 4

Security 4.5 3.5 3.5 4 4.5

Reliability 4.5 4.5 4.5 4 4.5

Network Architecture

4.5 4.3 4.2 4 4.2

44



►Character performance of the leading cloud microservice provider

(1) Agile Innovation：Cisco enjoys high reputation and customer satisfaction with agile response and innovative

solutions to operators’ diversified demands

(2) Maintenance & Debugging：Huawei provides prompt maintenance and debugging service which ensures the

reliability of operators’ business.

(3) Launch Efficiency：currently the efficiency level of microservice launching is underdeveloped, though Huawei is

more experience in dealing with Operators’ system transformation

(4) Scalability: providers assist Operators to transform into microservice architectures which simplifies single service

scaling, and Huawei performs better at defining the granularity to decouple the monolith.

(5) Performance Improvement: Huawei actively works with Operators to understand the specific downstream demands

and launch microservices architecture that better fulfil them.


Key Character Performance of Different Microservice Brand

Character Huawei Ericsson Nokia Cisco ZTE

Agile Innovation 3.8 3.5 3.5 4 3.5

Maintenance & Debugging

4 3.5 3.5 3.5 3.5

Launch Efficiency 3.5 3 3 3 3

Scalability 4 3.5 3.5 3.5 3.5

Performance Improvement

4 4 3 3 3.5

45

Thank You!

Global Cloud IMS Market Research

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